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It's official -- Joliet buys Evergreen Terrace

Karen Sorensen | 8/18/2015, 10:20 p.m.
Actual possession of the apartment complex could still take months, however, because HUD has a list of items that must ...
The Joliet City Council has agreed to borrow $15 million from its budget reserve fund in order to purchase the Evergreen Terrace apartment complex. Photo by Karen Sorensen

The city of Joliet is the new owner of Evergreen Terrace -- on paper, at least.

The Joliet City Council voted to amend its 2015 budget Tuesday night, removing $15 million from its reserve fund and committing it to the purchase of the blighted 365-unit apartment complex.

Actual possession of the six buildings, however, won't take place for at least another two or three months, City Manager Jim Hock said.

Before the keys can be turned over, the city must form a legal partnership with Holsten Properties to oversee the subsidized housing development's management and redevelopment and complete a 64-point checklist drafted by the U.S. Department of Housing and Urban Development, Hock said.

That checklist was presented at a meeting Hock had last week with HUD officials, who indicated they might not release the Section 8 apartment vouchers to the city until the appeal of condemnation suit is complete, Hock said. That could take as long as 18 to 24 months

"What they're saying is HUD is not going to let the city take over while the appeal process is pending," Mayor Bob O'Dekirk said. "We have an issue with giving $15 million (to purchase the property) and we're not going to receive any of the income that's coming in from the property."

That HUD would create roadblocks to Joliet taking possession of the complex came as a surprise to city officials, who assumed the federal agency's 2013 settlement of a lawsuit with the city over Evergreen Terrace laid out the expectations of what was to happen were the city to prevail in its condemnation case.

Either way, the one thing O'Dekirk and other council members stressed to Evergreen tenants Tuesday is that other than a change in management, nothing is likely to be done with the apartment complex for at least two years and probably much longer.

The city was also told at the HUD meeting it could not award an Evergreen management contract to the Housing Authority of Joliet without repeating the entire process of soliciting company proposals and then submitting the winner to HUD for final approval.

The federal agency has already given the green light to Holsten to serve as the management firm, which was chosen through the review process in 2013.

The complicated procedures needed to make Joliet the complex’s owner and landlord -- coupled with the unknown amount of money it will take to redevelop the site – were among the reasons cited by Councilman Larry Hug in casting the lone vote against the deal.

"This is a financial burden that will only get worse over time," he said. "I hope manage it better than we do other facilities, like the (Silver Cross Field) ballpark. ... We can't even keep a clock running on a ballpark, and we're going to take over a (365)-unit apartment building."

Hug predicted the $1.2 million profit the city expects to collect annually from apartment rents paid will end up being closer to $400,000 or $500,000, leaving taxpayers on the hook to pay off the bonds sold to repay the money taken from the reserve fund to pay for the complex.

Councilmen Jim McFarland and John Gerl were not much more optimistic, but said the city had few options given the $7 million already invested in legal fees over the course of the 10-year lawsuit and the possibility of having to pay Evergreen owners' legal bills and court penalties if they back out of the deal.

"Unfortunately, myself and others on the council inherited this mess," he said. "Looking at the cards in our hands, this is the best option in my opinion for the city of Joliet."

Contact Karen Sorensen at Karen@TheTimesWeekly.com.